21 Stocks for 2020

The telecommunications industry, specifically the rollout of 5G technology, is an industry to watch in 2020. With data transmission rates 10 to 100 times faster than existing 4G networks, 5G is expected to be the primary catalyst for the next generation of Internet of Things technologies. Companies such as Ericsson, Nokia, Verizon, AT&T, and even Apple are set to benefit from this new technology. Another industry to keep an eye on is banking, where consolidation is expected to continue due to pressure on net interest margins. Small caps are also worth considering, as they have lagged behind the S&P 500 in recent years but have historically performed well when interest rates are low. The potential for consolidation and attractive valuations make small caps an intriguing option for investors. Communication skills are essential in business and life, and the Think Fast, Talk Smart podcast, produced by the Stanford Graduate School of Business, offers valuable insights and tips from experts on how to hone these skills. Whether you're working on an elevator pitch or preparing for an important meeting, strong communication skills can make all the difference. So, listen to Think Fast, Talk Smart every Tuesday wherever you get your podcasts or on YouTube. And don't forget to check out Motley Fool Money for stock market news and insights.

The trends of convenience and advanced technology are expected to drive growth in various industries in 2020 and beyond. Small caps are predicted to outperform large caps in the S&P 500 this year. Ron Gross is excited about the trend of convenience, which includes same-day delivery, on-demand services, and technology that makes life easier. Jason Moser is focused on mixed reality technology, which is expected to grow from $4 billion in 2017 to $60 billion by 2023. Andy Cross believes that the workforce will continue to become more distributed, with companies investing in collaborative tools and remote work systems. Jason Moser specifically mentioned ANSYS, a company that leads in simulation software, as a stock with upside potential due to the increasing demand for efficient solutions. Overall, the Motley Fool team sees a future of convenience and advanced technology driving growth in various industries.

ANSYS, a leading simulation software company, boasts an attractive business model with a large customer base, high renewal rates, and impressive gross margins. Additionally, ANSYS' partnership with academic institutions to train future engineers on their software creates a strong ecosystem that benefits both employers and ANSYS. Despite competition from larger players like Autodesk and Assault Systems, ANSYS' unique focus on simulation positions it as the market leader. Moving on, Arista Networks, a cloud-based networking gear provider, has faced challenges with major clients like Microsoft and Facebook, but its entry into new markets and exceptional profitability indicate potential for growth and stock rebound. Lastly, the gene therapy sector, specifically CRISPR Therapeutics, is a long-term investment opportunity despite volatility, due to its solid balance sheet and potential to revolutionize medicine. On the other hand, investors should exercise caution with food delivery services, as the economics may not be as clear-cut as initially thought, leading to potential consolidation.

Harley Davidson and mall-based retailers like Macy's, Kohl's, and JCPenney face significant challenges due to declining sales and shifting consumer trends. Harley Davidson has struggled with its LiveWire ebike and underperforming stock, while mall retailers are losing customers to online shopping and other reasons. The trends are not in favor of these traditional businesses, and CEOs like Steven Coffer of Tripadvisor are under pressure to turn things around or face the possibility of being replaced. Tripadvisor, in particular, has failed to pivot and develop a sustainable business model in the face of competition from companies like Booking.com and Google. With abysmal stock performance, self-inflicted issues, and a lack of clear direction, Tripadvisor may need to consider putting itself up for sale to the most interested buyer. Overall, these iconic American brands and traditional retailers are facing significant headwinds and must adapt to changing consumer trends to remain competitive.

New CEOs, like Patrick Frisk at Under Armour, face significant challenges when taking over from a founder-led CEO, especially when the company's performance has struggled. In the case of Warren Buffett at Berkshire Hathaway, he must ensure a solid succession plan and invest $128 billion in cash wisely. Regarding CEO compensation, investors prefer performance-based incentives, long-term thinking, and alignment with shareholders. The culture of compensation, from the board to the CEO, is crucial for building a sustainable and successful business. Ron's biggest question for 2020 is about Bed Bath and Beyond and its ability to turn around its struggling business.

There have been significant changes at the top of Bed Bath & Beyond, with several executives leaving the company. New CEO Mark Tritton, a former executive at Target, is making moves to improve the company, including potentially focusing on private label brands and enhancing the in-store experience. However, the business is facing challenges from China tariffs, which have resulted in price increases and disrupted customer consideration cycles. Looking ahead to 2020, there is potential for the business to perform well if the China situation is resolved. Additionally, there is a growing emphasis on profitability for software as a service (SaaS) companies, and investors may be looking for more clarity on this front from companies looking to IPO. One private company that could potentially go public in 2020 is Medevis, a medical software maker, as there is increasing demand for profitability in the market. Overall, the focus is shifting towards profitability and cash flow, rather than just top line growth, as the bull market matures.

Technology is revolutionizing various industries, particularly in the medical field with companies like Medevis utilizing augmented, virtual, and mixed reality for innovative solutions. Another significant player, Palantir Technologies, is making waves in data analytics with its massive valuation and government contracts. In the business world, fast food chains like Chick-fil-A, despite controversy, are poised for success with impressive operations and customer experience. Surprising developments are expected in various sectors, such as Southwest Airlines recovering from setbacks. These are just a few of the many intriguing trends and companies to watch in 2020.

Despite some companies experiencing setbacks, such as Southwest Airlines with a 20% earnings decrease, their long-term potential remains strong. For instance, Southwest's affordable stock price, cash neutral position, and aggressive expansion into Hawaii make it a potential winner over the next 3-5 years. Another surprise for investors in 2020 is the comeback of value investing, which has been underperforming growth for over a decade. Additionally, specific companies like Bed Bath and Beyond, under new leadership, and Stitch Fix, with its personalized online shopping model, are expected to outperform. Investors may also regret not owning established companies like Target and Adobe, which continue to innovate and expand. Lastly, some food and beverage suggestions for companies include McDonald's introducing a mincemeat pie during the holiday season and Wendy's testing a stuffed sweet potato.

Creativity and innovation can come from unexpected places, even in the restaurant industry. The hosts discussed various food-related ideas, from stuffing sweet potatoes with unique ingredients to introducing a chicken and waffles burrito. They also highlighted the success of Applebee's $1 drink specials and suggested that other restaurant chains, like Darden Restaurants, could benefit from similar promotions. In the realm of more traditional predictions, Ron made a less reckless but still significant prediction about Berkshire Hathaway buying back a large amount of their shares and initiating an annual cash dividend. Overall, the discussion emphasized the importance of thinking outside the box and finding ways to appeal to customers through unique offerings and promotions.

The trend of large companies acquiring smaller ones, particularly in the software and data analytics space, is expected to continue in 2020. Investors seem to be on board with these acquisitions as a way for smaller companies to compete against the growth of tech giants like Amazon, Microsoft, Apple, and Facebook. Some potential targets for acquisition include DocuSign, Datadog, and other data analytics companies. The investment banking industry may also be pushing for more consolidation if the IPO market slows down. However, a more reckless prediction for 2020 is a national ban on electric scooters in cities, which could put an end to the market for scooter rental companies. Some panelists expressed skepticism about the safety of electric scooters, particularly in college towns where they are commonly used.